London start-ups: beyond the ‘Silicon Roundabout’

London has been described as a city of villages. Its population of 8.3m people is spread across 33 boroughs, which are themselves further fragmented into a patchwork of neighbourhoods. It is unsurprising, then, that the use of “Shoreditch”, the name of a single district, as shorthand for the city’s technology start-up cluster is considered by many aspiring entrepreneurs to be inadequate to describe a community that now encompasses thousands of young companies.

One of the main reasons for choosing to start a business outside the Shoreditch neighbourhood is the spiralling cost. Improvements to the area’s Victorian warehouses and growing demand for limited space has led to rents more than doubling in less than two years, from about £15 per square foot to as much as £40 in some locations, according to Brett Sullings, an agent in the commercial acquisitions, sales and lettings department of property firm Stirling Ackroyd.

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“This has meant that unless start-ups can find affordable space within the numerous tech hubs, incubators and creative shared spaces now establishing themselves in the area, many are being pushed out,” says Mr Sullings.

The Shoreditch neighbourhood was renamed Tech City in a 2010 speech by David Cameron, who set out a plan to extend the community east as far as the Olympic Park in Stratford.

Several companies with a large technology element to their operation were already moving into the wider borough of Hackney, where areas such as Homerton, Dalston and London Fields offered similar converted warehouse or industrial space to Shoreditch at a fraction of the price.

Jane ni Dhulchaointigh is the inventor of Sugru, a Plasticine-type silicone rubber that sets to enable repairs to household items and is sold largely online. She started making her product in a studio in Bethnal Green, a neighbourhood close to Shoreditch in 2005. In 2008, when her company FormFormForm prepared for full-scale manufacture, it moved up the street to a light industrial space with better delivery access.

The business moved again two years later, further east, to a former button factory near London Fields, where it could manufacture Sugru itself. Despite the rent rising by about 30 per cent since then, Ms ni Dhulchaointigh has stayed put, for the convenience and because the area has improved so much as a start-up location.

“There are many more places to be able to get lunch and have meetings and countless other exciting businesses hidden in the streets around us,” she says. These range from Lumi, a social networking site created by the founders of music streaming service Last.fm, to E5 Bakehouse, an artisan bakery and coffee shop.

Thanks to an upgrade and extension of local railway lines to create a Tube-quality service called London Overground, neighbourhoods such as Dalston and London Fields are within a few minutes reach of Shoreditch. London’s improving transport links are key to fuelling further expansion of start-up clusters.

Ryan Notz is a US-born stonemason and founder of MyBuilder, an internet marketplace connecting clients with tradespeople. He has been based in Farringdon, two miles from Shoreditch, for more than four years. He considered the area around the Old Street gyratory – which inspired the district’s nickname, Silicon Roundabout – but was put off because it was too far from the mainline stations used by his staff.

“We work long hours and the commute would have been longer for everyone,” Mr Notz says. “There’s only one Tube station [at Old Street] and a lot of people in our office were travelling into Farringdon Station from outside London.”

Others have gone further afield. Caspar Craven, co-founder of Trovus, which provides business analytics services to multinational clients such as IBM, Deloitte, Eversheds and Dentons, is based across the Thames at the Oval. The area is better known as the home of Surrey Cricket Club, but has many of Old Street’s benefits at a fraction of the cost, says Mr Craven.

“We’re in a workspace complex with lots of smart businesses,” he says. “Walk along the corridor and you can have lunch in the canteen with smart people from other early stage businesses. We’ve found suppliers, partners and mental sparring partners here.”

Another fast developing neighbourhood is the area behind King’s Cross and St Pancras Stations, where former goods yards and warehouses now house modern office space. Macmillan Group and Central St Martins arts college have relocated to the area, with Google to follow, helping to draw in early-stage technology ventures. However, the lack of smaller spaces on shorter leases is already pushing aspiring entrepreneurs to locate further west, around Euston station.

And there is a danger that productivity can suffer in the wrong environment, which has less to do with where you are and more to do with the type of office you choose, Mr Notz says. “I reckon that from our old office to our current one, we’re half as productive as we were,” he says. “People simply need space and privacy to be productive. Distractions kill [productivity], and big open-plan offices are full of distractions.”

He has made two offers for larger office spaces in the area around his current Farringdon base. “We need different working areas, so that the tech, marketing and service teams can have their own space and not feel that they are annoying others when they have work conversations.”

It is not only where your offices are in London that matters, but how you organise them.